DAG's legal position on the SOA

  • chris watson
  • 23/10/08 31/03/10
  • a depositor
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Posted: Sun, 19/04/2009 - 20:11

Dear DAG strategy team, or whomever can reply.

Thank you for posting regarding your legal position on the SOA, from which I quote:

"The DAG continue to believe that if the IoMT believe that depositors are united and will oppose the Scheme if it is not improved, it should be possible to obtain more favourable terms (than that currently on offer in the SOA)."

I presume we can't discuss this in a forum environment because our opponents will be monitoring and any dissent could be perceived as DAG not being united. Is there some way to however have more info on what firms this view in the DAG strategy teams collective mindset, in a 'secret way', because it's quite a bold statement, impacts both 'class 2 and 3' depositors, and is the cornerstone to the current anti-SOA stance?

Or is this info just on a need-to-know basis for the over-50K 'class' of depositor?

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Dangers of Liquidation

  • Mugged by HMG
  • 08/11/08 31/05/09
  • a depositor
  • Offline
  • Mon, 20/04/2009 - 15:03

This is my first post on here, although I do visit the site regularly and have been trying to keep abreast of things. I may have misunderstood the figures, so I’ll be very happy if someone can correct me.

My wife and I have around £25k each in a joint account. My main worries concerning liquidation come from the fact that the current cash value of the bank’s assets stands at around 15%. Also, according to the FSC spokesman at the court hearing, if the L-word comes into force and the DCS is triggered, the IoM contribution will be as follows:

“The new DCS only allows for a sum equivalent to the amount needed to make up the money from £20k to £50k compensation to be paid out by Treasury.”

Source: http://www.manxherald.com/index.php/business/485.html

My wife and I would get less than £4,000 each out of the pot as it stands plus a £5,000 top-up, i.e. the difference between £20k and our £25k deposits. This would leave an immediate shortfall of £32k to be paid when and with which funds?

Now as far as I know the banks contributed nothing to the DCS last year, so in the event of liquidation I have serious concerns as to where the rest of my albeit “guaranteed” compensation is going to come from and how many years it will take to arrive. Certainly the following article (also in the Manx Herald) does not altogether fill me with optimism regarding the DCS:

http://www.manxherald.com/index.php/business/403.html

According to the article Deputy Deemster Corlett was persuaded to grant the Treasury a further adjournment of the winding-up petition - not so much on how good the alternative, and yet to be nailed down, ‘Scheme of Arrangement’ (SoA), will be but - by how poor a ‘safety net’ the Depositors’ Compensation Scheme (DCS) is by comparison.

The article goes on to say, “It can really do the IOM no favours whatsoever by having to effectively admit that the much played on (for publicity purposes) DCS is in fact a ‘financial fig leaf’ and it isn’t really that great after all.”

I’m not sure I want to rely on a financial “fig leaf” to protect my albeit modest life savings.

From what I have understood the larger depositors will suffer possibly heavy and no less unacceptable losses under either scheme. Most of the posts I’ve read on here say there is no advantage in voting for the SOA, but do not suggest there will be any less money returned. If I have understood correctly and this is the case, then I’m not sure I understand the DAG stance, unless it is a case of awaiting greater clarification.

PS I can’t access the above articles at the moment. The Manx Herald site has been having problems lately, but if they don’t reappear I’ve saved them to my documents and can forward them to anyone interested.


By its own admission the

  • expatfrance1
  • 15/10/08 31/05/09
  • a depositor
  • Offline
  • Mon, 20/04/2009 - 08:23

By its own admission the DAG's view in favour of liquidation seems to be based on a number of assumptions which may or may not pan out:-

  1. The DCS is not as flawed as advocates for the IoMT have sought to indicate in court.
  2. Recoveries are being assumed to be of more than 60p in the £.

As regards to point 1, there seem to be many people on this site, even some of those that support liquidation and the DCS, that have raised seroius doubt about the capabilities of the DCS.

There is also another assumption that no other bank is going to require compensation from the IOM authorities.

Whilst I can understand that for high value depositors this may be a risk worth taking I am not sure that the case really stacks up for low value depositors.


More time delays?

  • Anonymous
  • Offline
  • Sun, 19/04/2009 - 22:23

This brings me back to one of the many concerns I have expressed. If the DCS is elected, how many further delays can we expect before we have access to our fund? I doubt any payment will be made if legal or any other action is taken with the government and /or bank, as the result of such action could have a bearing on expenses, the scheduling and availability of funds. We know that it is within the Liquidator's right to hold back distributions should he /she feel the need to do so.


And those depositors who

  • expatfrance1
  • 15/10/08 31/05/09
  • a depositor
  • Offline
  • Mon, 20/04/2009 - 06:14

And those depositors who either through careful planing or who were just fortunate to have put less than the old DCS limits into KSF will now not know when they will see all of their money again.

According to the DAG's own estimates they will still have only received 82% by December 2010 and then there is no indication of when the remaining money will be paid!


Am I missing something?

  • Done like a Kipper
  • 10/10/08 n/a (free)
  • a depositor
  • Offline
  • Mon, 20/04/2009 - 07:53

Surely for those who deposited up to the old DCS limit (75% of £20,000) EPS 1 & 2 will have already almost paid them out (if they've applied for it of course)?


almost paid them out ?

  • Anonymous
  • Offline
  • Mon, 20/04/2009 - 08:13

EPS2 will, I think, pay out just 50% of a £20,000 balance.

The increase in "guarantee" (being discussed from March 2008, wasn't it ?) was to update it and bring it more in line with guarantees to savers in many countries - surely Good News for all savers (who, if like me, thought until Autumn 2007 that all their savings were safe) ??


Let me use a crystal ball

  • chris watson
  • 23/10/08 31/03/10
  • a depositor
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  • Mon, 20/04/2009 - 07:57

And those that deposited over the 20K old DCS limit, but were fortunate enough to be within the current DCS 50K limit, should be dragged into the liquidation mire by other depositors because it is only fair!


Maths

  • Done like a Kipper
  • 10/10/08 n/a (free)
  • a depositor
  • Offline
  • Mon, 20/04/2009 - 09:13

Old DCS limit 75% of £20,000 = £15,000.

EPS 1 & 2 £10,000 therefore those who deposited up to the old DCS limit will already have a two thirds payout.


This brings me back to one

  • Jerome.broke-in...
  • 14/10/08 14/07/09
  • a depositor
  • Offline
  • Sun, 19/04/2009 - 23:18

This brings me back to one of the many concerns I have expressed. If the DCS is elected, how many further delays can we expect before we have access to our fund? I doubt any payment will be made if legal or any other action is taken with the government and /or bank, as the result of such action could have a bearing on expenses, the scheduling and availability of funds. We know that it is within the Liquidator's right to hold back distributions should he /she feel the need to do so.
If the SoA is rejected then Liquidation will happen. In that event the LP is required to make a distribution. Sure he is required to retain sufficient funds to fund his fees and expenses but that can not hold up an initial distribution it can only impact the amount. Also you as an individule have the option to apply for the DCS


This brings me back to one

  • Anonymous
  • Offline
  • Sun, 19/04/2009 - 23:34

There's a little more to it than that. One thing you have forgotten is that if the SoA is not sanctioned then the LP's costs occasioned by the scheme's development, and the bank's costs occasioned by it, and indeed any other costs occasioned by it will have been wasted (in the legal sense) and ought to be paid in full by IOMT.


Thank you DST

  • chd
  • 13/10/08 30/09/09
  • a depositor
  • Offline
  • Sun, 19/04/2009 - 23:07

Just want to say thank you to DAG ST for the wonderful report. At last there is a document that is coherent and makes sense. Look forward to getting instructions on how to vote using you as our proxy.